Transforming the Gig Economy: How Unionized Cooperatives Can Create Wealth for All Workers
By Ra Criscitiello, Deputy Director of Research at SEIU UHW,IFTF Equitable Enterprise Initiative Advisor
This essay is a part of a series. Read the overview “Imagining Equity: Explorations into the Future of Enterprise” here.
In the late 19th century, the Knights of Labor (KOL), a labor federation founded by a small group of Philadelphia tailors, organized hundreds of industrial worker cooperatives. In partnership with rural farmers, the KOL organized racially integrated cooperatives, including a Louisiana agricultural cooperative of formerly enslaved people. The KOL cultivated a synergy between union activism and cooperative development, exemplified by the KOL cooperative created by striking workers from a Brooklyn watch manufacturing facility. Although by the middle of the next century the labor and cooperative movements largely forged ahead on separate tracks, the alignment of the two movements, as demonstrated by the KOL, provides models for working people to fight racial capitalism and exert more control over the conditions of their workplaces in order to retain greater value from their labor. While unions today are far more powerful and exist on a far greater scale than worker-owned firms, cooperatives have the ability to strengthen unionized workplaces by furnishing additional tools for organizing and building power. Today, the top 10% of households in the United States own more wealth than the bottom 90% combined. We can expect that divide to remain unless we employ tools — such as worker ownership — to help build the asset wealth of low- and middle-income workers. Given the recent growth in precarious, low-wage, and gigified work, now is the time for cooperatives and unions to work together toward the shared goal of empowering workers.
The Benefits of Union and Cooperative Collaboration
At first blush, union activists and worker ownership advocates may find the idea of merging unions and worker ownership either redundant or counterintuitive. For union proponents, the union is generally seen as the primary way for workers’ voices to be heard in the context of a workplace characterized by an entrenched tension between workers and bosses. Worker ownership advocates, on the other hand, seek to transcend the duality of labor and management altogether. But this difference belies the fact that union and worker-ownership advocates have similar aims; together, union representation and worker ownership can complement one another in important ways, injecting worker voice and accountability at multiple levels of governance.
Through unions, workers gain collective power to bargain for improvements in their work lives and hold managers accountable, while worker ownership ensures that workers receive a meaningful share of the gains their labor creates and, in the case of cooperatives, promotes democratic control of the applications of that labor. Furthermore, union representation combined with worker ownership can curb relentless outsourcing, deepen member engagement, stabilize career pathways, create access to wage growth, improve the quality of worklife, reduce workforce turnover, and promote an employment model that is both accountable to workers and communities and more stable and aligned with organized labor’s values. There are of course challenges to union/cooperative partnerships: governance and decision-making roles can be confusing; there is a potential risk to workers if a newly formed cooperative fails; and there is a possibility that worker ownership could be presented to workers as an alternative to unionizing in order to suppress a union vote. However, prospective benefits strongly outweigh these risks.
Cooperative development and organized labor have different strengths that have the potential to augment the capacities of the other and build innovative organizing and worker engagement campaigns. Unions bring valuable resources that are particularly helpful for scaling cooperative structures, including large training and education funds for career and wage growth, access to capital and relationships with financial players, experience negotiating contracts that are protective of workers’ rights, and ownership of real estate. Alternatively, cooperatives employ a unique governance structure that aligns with labor’s key value of centering workers. The worker-owners, on a one-member-one-vote basis, elect the board who oversee the management of the company, who in turn oversee the worker-owners. As a result, in contrast to a traditional firm, the worker cooperative model has an accountability loop that starts and ends with worker-owners, and founders have the same voice as all worker-owners in governance decisions. In addition, the cooperative corporate structure mandates worker control, limits the liability of workers, allows for immigrant-led firms without jeopardizing workers’ legal status, and helps preserve the mission of the cooperative over time. In short, the capital structure of worker cooperatives prohibits the types of predatory and extractive behavior typically embedded in capitalist business structures and which unions work to mitigate.
In general, cooperatives are excellent at protecting worker wages, benefits, hours, and working conditions because they have built-in worker voice and control and increased job security. However, in the case of cooperatives that are small or serve disaggregated groups of workers, unions can provide access to pooled benefits including health care, pensions, and other retirement plans that would typically be unavailable to these types of organizations. Unions can also leverage large joint union/employer trust funds to provide their members access to funds for training, education, childcare, and housing, among other benefits. So, unions can leverage significant benefits for workers that cooperatives may not be able to provide on their own. This stability is particularly valuable in an unpredictable economy where jobs with good pay and benefits are increasingly rare. Beyond financial benefits, combining worker cooperatives with unions also enhances worker power in political arenas. Often small in size, cooperatives generally struggle to collectivize their workers on a scale that brings political heft. But with union membership, cooperative members are networked into the union’s political and government relations machinery.
The ability of the union worker cooperative model to positively transform a sector is perhaps nowhere more stark than in the gig economy. In California, the Dynamex decision and AB 5 demonstrated the untenable tension in contemporary employment structures between workforce flexibility and worker protections and highlighted the proliferation of jobs that Governor Newsom’s Future of Work Commission has termed “asset poor.” Through dependence on independent contractors and misclassification, tech companies that rely on gig work have profited handsomely at the expense of rideshare and delivery drivers, cleaners, and other low wage workers. The unionized worker cooperative offers a model for transforming the gig economy from corporate structures engineered to benefit owners and highly-skilled workers to forms of enterprise designed to share wealth throughout the entire worker pool.
The Allied Healthcare Worker Cooperative
There is an overrepresentation of unionized worker cooperatives in care sectors, including home care, child care, and health care. Like most care sectors, nursing home, long-term care, and home care workers are mostly women and disproportionately immigrants and people of color. Law and policy have reinforced the devaluation of these types of work, including by excluding many long-term care workers from full labor and employment protections and depressing public funding reimbursement rates. Among other factors, high turnover and inadequate compensation contribute to an exploding workforce shortage in these sectors.
Recently, the on-demand gigification of work has affected nearly all industries, including healthcare. Patients want to be seen at home on their own schedule. Just as Uber has decimated the business model of an entrenched, highly-regulated, yet ultimately unpopular taxi cab industry, so too have on-demand healthcare companies attacked the traditional employment model currently used by hospitals and clinics, as well as eroded scopes of practice of licensed healthcare workers. For instance, Licensed Vocational Nurses (LVNs) in California have historically been employed by hospitals and enjoyed a broad scope of practice including patient intake, administration of some medications under supervision, and a host of patient-facing tasks. As RNs successfully fought for better RN staffing ratios over the past decade, some positions formerly held by LVNs have been replaced by RNs. This has pushed many higher-paying LVN hospital jobs outside the four walls of the hospital and into lower-paid positions at nursing and long-term care facilities, where LNVs are typically relied on for patient care tasks such as patient monitoring that fall in the less-skilled area of their scope of practice. Similarly, jockeying among licensure boards has scaled back some practice areas of workers in classifications like phlebotomy and medical imaging technology.
Against this backdrop, several unions have explored unionized worker cooperatives as a way to improve quality of care along with work quality for healthcare workers. Union development of start-up cooperatives is one powerful way to bring the benefits of worker ownership and organized labor to larger pools of workers. The example provided by SEIU-UHW, a healthcare workers union of 100,000 allied healthcare workers across the state of California, illustrates how this model can scale. SEIU-UHW members are frontline caregivers, including respiratory care practitioners, dietary, environmental services/janitorial, and nursing staff. The union’s membership is working to improve the healthcare system by providing quality care for all patients, expanding access to excellent, affordable healthcare for all Californians, and improving living standards for all workers.
During the pandemic, SEIU-UHW’s leadership and members grew increasingly frustrated by the hospital and healthcare staffing industry’s focus on shareholder and executive profits over worker wealth-building, worker health and safety, and patient outcomes. Hearing their membership’s concern about the erosion of bargaining unit jobs, SEIU-UHW decided to experiment and build relationships that would create a pilot project to study and understand the possibilities of worker ownership for union members, first with LVNs and later with other allied healthcare classifications. In both instances, the local union was interested in exploring worker-owned staffing firms that could essentially corner a significant piece of the labor supply by attracting workers to the enhanced benefits and pay of the worker-owned agency and leverage union relationships with hospitals and clinics to supply unionized labor to healthcare facilities. The local’s vision was that a cooperative of LVNs could be a viable union alternative to low-road contracting out: in only a few years, thousands of union healthcare workers employed by cooperatives could provide millions of visits to patients, and beyond LVNs, cooperatives could be created for all manner of techs, therapists, and other healthcare workers.
With development assistance from SEIU-UHW, five LVNs, all members of SEIU-UHW working in California, founded a worker-owned cooperative of LVNs in January 2016 called Nursing and Caregivers Cooperative, Inc. The LVNs wanted to provide home visits to patients through the use of an app, and they wanted LVNs to be employees and owners of the cooperative. Through the collective purchasing power of the union, they hoped that the cooperative would eventually be able to provide employees with benefits such as health insurance, retirement, and training opportunities.
In order to test the model, the cooperative, in partnership with the local union, reached an agreement to provide home visits by the cooperative’s LVNs to patients of St. John’s Well Child and Family Center (St. John’s), a network of Federally Qualified Health Centers in Los Angeles, California. Under the supervision of St. John’s physicians, LVNs employed by the cooperative provided perinatal visits and education to Medi-Cal patients at their homes. The patients were in a program called Comprehensive Perinatal Services Program (CPSP), a Medi-Cal program offering services to pregnant women. These visits were an affordable and effective way for St. John’s to reach this particular population of patients.
St. John’s, SEIU-UHW, and the cooperative all considered the pilot project a success. The cooperative was a high-road employer, showed the ability to scale the workforce up or down depending on need, and contained cost, risk, and liability for St. John’s. The cooperative was able to recruit LVNs from the communities they were serving in order to align cultural competence and language skills. St. John’s was able to extend care in the community and home, especially for low-income patients facing barriers to care such as lack of transportation, lack of childcare, inflexible work schedules, and housing instability. St. John’s Chief Medical Officer, Dr. Helen Duplessis, said that the partnership “helped our most vulnerable clients access the health services they needed to achieve better outcomes in their pregnancy.”
AlliedUP was launched in March 2021, as a unionized allied healthcare staffing cooperative with the mission of providing excellent healthcare to patients, high-quality service to clients, and meaningful employment and ownership to workers. It provides healthcare staffing on full-time, part-time, and temporary assignment basis so that workers can access the types and number of shifts they desire. AlliedUP targets the five largest metropolitan areas in California that are experiencing supply gaps for allied healthcare workers and focuses on giving large and small healthcare providers the flexibility to quickly scale up their workforce, and aims to pay its workers $3 — $5 more per hour than the staffing industry average, in part to resolve the retention challenges faced by traditional staffing firms. In contrast to traditional allied health staffing firms, AlliedUP provides not just above-market pay, but also benefits such as employer-paid medical, dental, and vision benefits, paid time off, opportunities for wealth building, and access to professional education. AlliedUP is structured to allow workers to accrue hours for benefit eligibility regardless of the number of providers or assignments or the location.
In addition to providing better paid and more secure jobs to workers, AlliedUp is strengthening the future of the healthcare sector through education. In their last round of collective bargaining, SEIU-UHW in partnership with Kaiser Permanente raised $130 million to fund Futuro Health, an education non-profit that trains workers outside of SEIU-UHW’s membership to help ease the coming shortages of key allied healthcare classifications. SEIU-UHW and Futuro Health help healthcare employers train workers for impending or persistent vacancies, especially in geographies with severe shortages. Futuro Health’s goal is to graduate 10,000 new licensed and/or credentialed allied healthcare workers by 2024 to help meet growing needs. Once students complete programs and receive their credentials, Futuro Health channels them to AlliedUP to help them transition into high-demand allied healthcare jobs while simultaneously providing businesses with a high-quality workforce. AlliedUP becomes the employer of record for the graduates who elect to join, and students are able to transition into jobs that are well-paid, benefitted, aligned with their expertise and needs, and committed to workers’ asset growth.
Unions and worker owned enterprises are fighting the tide of hostile employment practices, anti-union animus, the growth of independent contracting and misclassification, and an increasing subordination of people to profit. The COVID-19 pandemic has drastically deepened these rifts, and especially so for low-wage and marginalized workers. As a result, there is a palpable and intensified interest in worker ownership and a resurgence of union activism. Recent organizing of Amazon and Starbucks workers demonstrate an inspiring wave of powerful, organic worker advocacy. We are also witnessing the reinvention of old models, ideas, and concepts leading to the creation of new organizational forms, like platform cooperatives and cooperatively owned data trusts. The union worker cooperative fundamentally reimagines the 21st century enterprise as a site for worker-centered employment that gives workers access to substantial benefits, expands worker voice and accountability, advances equity and inclusion, creates wealth for workers, and supports an ethical economic paradigm. It is our hope that this model provides fertile ground for thinkers, policymakers, workers, academics, and others to continue to build the cooperative future we hope to see.
 Worker ownership is a broad term inclusive of all worker-owned firms, such as worker cooperatives, employee stock ownership plans (ESOPs), and perpetual purpose trusts.
 Shifting power, meeting the moment: worker ownership as a strategic tool for the Labor movement, Sanjay Pinto, Camille Kerr and Ra Criscitiello (Dec. 30, 2021), https://scholarship.libraries.rutgers.edu/esploro/outputs/report/Shifting-power-meeting-the-moment-worker/991031705278004646.
 AB 5 is California legislation passed in 2019 that codifies Dynamex, a 2018 California Supreme Court decision that established a new legal standard for determining whether a worker is an employee or an independent contractor for purposes of California wage orders. The new rule creates a presumption that workers are employees unless an employer can prove otherwise using a 3-pronged “ABC” test, and results in classifying most gig workers as employees with the rights and protections of formal employment. https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201920200AB5
 Helpful to envisioning a future economy rich with networks of unionized worker-owned cooperatives is a brief inventory of some current examples of success stories of this model. Perhaps the most well-known because of its size and long history is Cooperative Home Care Associates (CHCA) in New York, unionized by SEIU Local 1199. Created in 1986, CHCA provides home health services and now has over 2,000 worker-owners. In 2003, CHCA’s workers forged a single bargaining unit and negotiated a collective bargaining agreement with SEIU Local 1199. Workers were offered the chance to voluntarily buy a $1,000 share to become worker-owners. CHCA currently allocates 80% of its revenue to workers’ wages and benefits. 1199 is currently pursuing worker cooperative conversions of nursing homes.
Cooperatives have also been developed through a Steelworkers partnership with Mondragon. A 2009 agreement between Mondragon and the Steelworkers created the Cincinnati Union Cooperative Initiative, which incubates Mondragon-style union worker cooperatives in the United States. Care Share in Cincinnati is developing a multi-stakeholder cooperative to provide shared childcare services as part of the Cincinnati Union Cooperative Initiative, and is unionized by SEIU 1199 WV/KY/OH.
Organized by CWA, Green Taxi Cooperative in Denver allows drivers to contract with the cooperative for full-time work. In partnership with the cooperative management firm ICA Group, SEIU HCII and SEIU International are developing CoRise Cooperative,# a family childcare cooperative in Illinois. CoRise was created to employ the state’s 35,000 childcare workers. A Maine cooperative of lobstermen, Lobster 207, was developed with support from the IAM.# New Era Windows in Chicago was created by converting an existing window manufacturing company into a worker cooperative with support from UE 1110 and a non-extractive financing partner.#
Similar to worker cooperatives, worker-centered purpose trusts have been used in innovative ways to advance worker voice and combine union values with worker ownership. The Home Care Workers Purpose Trust (“Trust”)# in Washington state, organized by SEIU 775 is a clever trust structure that preserves the gains of the public authority model. Organized as a non-charitable perpetual purpose trust, the Trust exists for the purpose of benefiting workers. The Trust owns company stock in order to ensure the company is managed for the benefit of workers. The Trust now employs the state’s 45,000 home care workers. Although the public sector had been a bastion of relative strength for the labor movement in the U.S., relatively recent developments at the federal and state level including the Janus decision eliminating “fair share” dues requirements for those represented by unions in the public sector are undermining this power. In this context, the Trust holds the potential for preserving union power in the public sector while holding on to public funding.